World Trade Blocs
We spent considerable time in the last Road Warrior column examining the newly emerging Asian trade zone. With over half of the world’s population and 25% of the globe’s output, it’s a variable that farmers and ranchers must reckon with.
In a 1990 article in a major dairy magazine, I wrote about the mega-trends of the agricultural industry. In that article I presented a perspective that global trade blocs would emerge in the next 25 years. My high school ag teacher, who has since passed, read the article and said he thought I was on to something.
Now let’s examine the power of these blocs. Let’s take a terrorist-free plane trip to Europe and examine the European Union. This 25-nation bloc represents 460 million people and nearly a $12 trillion dollar economy. The area is challenged with economies put in place after World War II with six-week vacations, retirement at 55 and agriculture that is heavily subsidized. The population also largely supports these government programs.
NAFTA, comprised of Canada, the U.S. and Mexico, represents 430 million people and a GDP of about $13 trillion, or 30% of the world’s output. Recent publications in Canada indicated that NAFTA has not been beneficial to agriculture; however, this North American bloc together is a big powerful economic landmass.
Finally the Asian group described in the last column has 3.1 billion in population and almost $10 trillion in economic output. This group is forming alliances with South America and the Middle East for agricultural output and to meet energy needs.
The Road Warrior of Agriculture
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
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